BMO Financial Group announced a deal Friday to buy the Air Miles loyalty rewards program in Canada after its U.S. parent company filed for bankruptcy.

The bank’s so-called stalking horse offer for LoyaltyOne Co. is US$160 million, subject to certain adjustments, according to court documents.

Air Miles president Shawn Stewart said the deal “brings stability to the Air Miles program.”

“It gives us the opportunity to grow the program for our collectors and partners, and confidence in the future of the program,” he said in an interview.

“Our U.S. parent company had a ton of debt and that just constrained our ability to invest in value for the collector.”

The deal has no impact on reward miles balances or the ability to redeem miles, Stewart added.

Air Miles is one of the oldest and largest loyalty programs in Canada, with nearly 10 million active users.

Collectors earn Air Miles through participating stores, services and payment cards, which can be redeemed for “aspirational rewards” like merchandise, travel, events, and attractions.

Yet Air Miles has lost a string of big retailers in Canada in recent years.

Last summer, Sobeys and Safeway owner Empire Co. Ltd. and office supply retailer Staples said they would be scrapping the Air Miles program, a year after the Liquor Control Board of Ontario and Lowe’s Canada pulled out of the program.

The Air Miles parent company stock, which was traded on Nasdaq, fell after Sobeys pulled out of the program.

Loyalty Ventures Inc., the parent company of LoyaltyOne, filed for Chapter 11 bankruptcy in the U.S. on Friday. It also delisted its common stock from the Nasdaq.

The BMO deal for Air Miles has been proposed as part of LoyaltyOne’s proceeding under the Companies’ Creditors Arrangement Act in Canada.

The process will include a sale and investment solicitation process to seek any other interest in the Air Miles business.

The sale transaction is contingent on LoyaltyOne not receiving a more favourable offer and will require court approval.

BMO, a founding partner of Air Miles since 1992, said the purchase would accelerate the loyalty program’s future growth.

“We will bring the ownership of Air Miles home to Canada and strengthen its offering for Canadian consumers and businesses,” said Ernie Johannson, BMO’s group head, North American personal and business banking.

The bank is approaching Air Miles with a “long-term perspective, not a short-term tactical” approach a holding company based in another country might take, she said.

With a holding company “there isn’t necessarily the same belief in the program,” said Johannson, who by chance started her career 30 years ago with Air Miles. “We want to run it like an entity and be able to fund it, grow it and inspire it”.

Rewards programs have proliferated in recent years as companies seek to learn more about customers and their shopping habits.

The data collected through these programs is used to target customers with tailor-made marketing offers and promotions in a bid to increase sales and loyalty.

The mounting value of loyalty programs has prompted some retailers to adopt and expand their own programs.

Last June, Empire said it would scrap the Air Miles program after it became a co-owner of the Scene+ program operated by Cineplex Inc. and Scotiabank.

Stewart, who joined Air Miles last spring after eight years building and growing Canadian Tire Corp.’s Triangle Rewards loyalty program, said it’s an increasingly competitive marketplace.

But Air Miles still has a competitive edge, especially for small- and medium-sized businesses that might not have the scale to invest in their own loyalty program, he said.

“With Air Miles you get the benefit of access to 10 million collectors out of the gate,” Stewart said. “We’re lending our scale and a very well-known recognized brand to businesses.”

Still, while Air Miles is offered by some small mom and pop shops, it continues to boast a number of larger retail partners, including Metro grocery stores and its drugstore chain Jean Coutu, American Express Canada, Irving and Shell gas stations as well as online partners like Amazon and eBay.